Correlation Between CITIC Guoan and Ming Yang

Can any of the company-specific risk be diversified away by investing in both CITIC Guoan and Ming Yang at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CITIC Guoan and Ming Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITIC Guoan Information and Ming Yang Smart, you can compare the effects of market volatilities on CITIC Guoan and Ming Yang and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CITIC Guoan with a short position of Ming Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Guoan and Ming Yang.

Diversification Opportunities for CITIC Guoan and Ming Yang

0.93

Correlation Coefficient

CITIC Guoan  Ming Yang

Almost no diversification

The 3 months correlation between CITIC and Ming is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart and CITIC Guoan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CITIC Guoan Information are associated (or correlated) with Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Ming Yang go up and down completely randomly.

Pair Corralation between CITIC Guoan and Ming Yang

Assuming the 90 days trading horizon CITIC Guoan is expected to generate 1.12 times less return on investment than Ming Yang. In addition to that, CITIC Guoan is 1.2 times more volatile than Ming Yang Smart. It trades about 0.21 of its total potential returns per unit of risk. Ming Yang Smart is currently generating about 0.28 per unit of volatility. If you would invest  834.00  in Ming Yang Smart on September 16, 2024 and sell it today you would earn a total of  608.00  from holding Ming Yang Smart or generate 72.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CITIC Guoan Information  vs.  Ming Yang Smart

CITIC Guoan Information

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Guoan Information are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Guoan sustained solid returns over the last few months and may actually be approaching a breakup point.

Ming Yang Smart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Yang Smart are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ming Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Guoan and Ming Yang

The main advantage of trading using opposite CITIC Guoan and Ming Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Guoan position performs unexpectedly, Ming Yang can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ming Yang will offset losses from the drop in Ming Yang's long position.

The idea behind CITIC Guoan Information and Ming Yang Smart pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.